You may be familiar with the saying, "It's better to be safe than sorry." So with that in mind, is renters insurance worth it? If you're one of the millions of Americans living in a rented home or apartment, then it's definitely something you should consider. Renters insurance can protect you against the worst-case scenarios that could leave you in a bad financial spot.
Let’s take a closer look at what renters insurance covers and help you decide if renters insurance is worth it.
How does renters insurance work and why is it important?
So how does renters insurance work, and why should you have it? Renters insurance allows you to protect your belongings in the event they are destroyed while you are living in a rented home. Although it does not ensure the physical space against damages, it can help you to replace your things.
Of course, we all hope that nothing damaging ever happens at our home. However, it is not impossible for a break-in or other unforeseen emergency to destroy your things. These kinds of life events always seem to happen at the worst possible time.
Without renters insurance, you would be on the hook to replace all of your belongings. With renters insurance, however, you would be able to replace your damaged items without worrying about the financial strain it would place on your budget.
What does renters insurance cover?
So is renters insurance worth it? Well, the first step in helping you to decide if it is or not is to understand what it covers. Although individual renters insurance policies vary, let's go over some of the most common events covered. As you shop for your own policy, you should consider your unique situation.
1. The theft of your belongings
Unfortunately, theft from break-ins can be a problem even in the safest neighborhoods. With some policies, you’ll be able to recover the cost to replace your stolen items. This is good to have for everyone but especially for those with high-end luxury items.
2. Fire and smoke damage
No one expects a fire to happen in their home. However, thousands of home fires happen every single year. In fact, 354,400 home structure fires occurred between 2013 and 2017 in the US.
In many cases, a fire will destroy most of the items in a home. Without renters insurance, it could be financially difficult to replace these items at one time.
3. Falling objects and glass damage
A storm can knock falling objects directly into your home, leaving a trail of damage behind. You could be responsible for replacing your damaged items without renters insurance. The landlord will be responsible for their property but not for your personal items.
4. Automobiles or aircraft that crash into your apartment
Unfortunately, cars have been known to crash into homes and cause significant damage. Although plane crashes are less common, some renters insurance policies cover that type of damage as well.
Even though these events may be rare, you would have to pay out of pocket for your belongings. So keep that in mind to help you to determine if renters insurance is worth it.
5. Water damage
A burst pipe can lead to a flood of damage. With potentially several inches of water in your home, you can expect to replace thousands of dollars worth of belongings. Even a solid emergency fund could be stretched thin without the help of renters insurance.
6. Electrical surge damage
Although it is good practice to hook up your electronics to a surge protector, many renters insurance policies will help you replace any damaged electronics due to a surge. This can save you quite a bit of money on items such as laptops, televisions, and other types of electronics.
7. Extreme events
Volcanos, riots, vandalism, and explosions may seem like something out of a movie, but you never know what the future may hold. Most renters insurance policies cover a wide variety of other scenarios that you may not have thought of.
As you think about your current apartment, consider what events might cause damage in your area. Look for that coverage as you shop for policy options.
8. Pet incidents
Did you know that some rental insurance policies can cover medical expenses if your beloved dog were to injure someone? (Such as a bite) Sometimes things happen accidentally; even a playful nip may require some medical attention, and this will help you from having to pay those costs out of your pocket.
Unfortunately, some breeds are excluded from coverage, so be sure to research the policy details before signing up.
Common questions about renters insurance
As with most insurance policies, it is a great idea to ask questions before you choose to plan. This can help you in deciding if renters insurance is worth it. With that, let’s tackle the most common questions about renters insurance.
Does my landlord's insurance policy cover me?
Although your landlord’s policy will likely cover the cost of repairs to your apartment, it will not cover your personal items. A landlord is interested in protecting their property against damages. But their policy will not cover the items that you have in that property.
For example, let’s say a pipe burst in your apartment and flooded everything. Your landlord’s policy would help them cover the cost of repairs to the actual property.
However, it would not help you cover the cost of replacing your belongings. With that, it is up to you to find a policy that covers the replacement of your belongings.
Does my roommate’s policy cover me?
In most cases, your roommate’s policy doesn’t cover you. Unless the policy specifically covers you, then you should consider purchasing your own coverage.
Does renters insurance cover high-value items?
There is a wide range of policy options for renters insurance. With that, some policies do cover high-value items, but other policies do not.
If you are looking to cover a specific item such as heirloom jewelry or your high-end designer bag, then read the fine print of your policy to find out if it covers those items. If not, you can consider supplemental insurance for those, particularly high-value items.
Is renters insurance worth it?
So, even after knowing what it covers, you may still be wondering, "is rental insurance worth it or not?" In most cases, it can be, but here’s how to decide for yourself.
Take an assessment of your belongings
So is renters insurance worth it for you personally? The first thing to do to determine if renters insurance is worth it is to figure out the value of the items in your apartment. I recommend taking a notepad through each room in your home and writing down an approximate value of the items you see.
Nothing is too large or small to include. You may want to round your numbers for certain rooms. For example, instead of accounting for every dress and pair of shoes in your closet, come up with a reasonable number that you would need to replace all of those clothes.
Don’t forget big-ticket items such as your furniture, TV, and computer. You might be surprised to find out how valuable your items are when you add the numbers together. It is not unreasonable to assume that you have several thousand dollars worth of items in your apartment. Assessing the value of your belongings can help you to decide if
Compare renters insurance policy quotes
Once you have a better idea of what it would cost to replace your things if something were to happen, it is time to shop around for renters insurance policies. You can find policies that range from $5 to $30 per month.
Depending on the value of your items, a few dollars a month could be a no-brainer to protect your things. After all, thousands of dollars in items would be difficult for most of us to replace in an emergency.
In most cases, renters insurance is worth it. But it is a personal decision based on your risk tolerance. If you would be content to replace the items on your own tab or simply live without, then you might be able to skip renters insurance. Otherwise, you might feel better knowing that your items are protected no matter what life throws your way.
Personally, my husband and I pay renters insurance for our small apartment. Although none of our household items are particularly valuable, it would definitely be a financial burden to replace everything all at one time.
Since we have other plans for our savings, such as building a down payment for a home and growing our retirement savings, we’ve decided to pay for renters insurance. The $12 we pay each month is completely worth the peace of mind that comes with it. Consider your personal situation before making a decision about renters insurance.
Protect yourself with renters insurance
So is rental insurance worth it? In most cases, yes, because it can save you thousands of dollars in replacement costs. Renting an apartment to call home can be a fun adventure.
However, life has the habit of throwing unexpected curveballs our way. Renters insurance can help you handle the ups and downs in stride.
Renters insurance is one of several insurance policies you may not have realized you needed in the past. Take a few minutes to find a policy that works for you today!
Learn more on equipping yourself for a sound financial future with the Clever Girl Finance Roadmap! Also, subscribe to the Clever Girls Know podcast and YouTube channel to learn all about personal finance!